iPhones and profits up, iPads down for Apple in Q2 of 2014 [Updated]

Apple beats its guidance, but it isn't growing like it used to.

The growing maturity of the smartphone and tablet markets was readily apparent in Apple's financial results for the second quarter of its fiscal 2014, which runs from the beginning of January to the end of March. Even though it sold a few more iPhones than it did in the second quarter of 2013, it sold slightly fewer iPads, and both revenues and profit margins were up a little from last year (think single-digit percentage growth).

There's no question that Apple is still making money hand over fist: it reported profits of $10.2 billion on revenue of $45.6 billion, giving it a profit margin of 39.3 percent and beating its own upper guidance of $44 billion from last quarter—those margins also beat the company's upper guidance of 38 percent. It's just that the company is no longer growing as explosively as it once was, something that investors and analysts alike are quick to lose their heads over. Apple's guidance for next quarter predicts revenues between $36 and $38 billion and a profit margin between 37 and 38 percent.

Apple's past growth has been driven mostly by entering entirely new product categories, like it did when it introduced the iPod in 2001, the iPhone in 2007, and the iPad in 2010. The most persistent rumors involve TV (whether a new Apple TV set-top box or an entire television set) and wearable computing devices (the perennially imminent "iWatch"), but calls for larger and cheaper iPhones also continue. An internal Apple presentation shown as part of the ongoing Apple v. Samsung case suggested that most of the continued growth in the smartphone market is coming from phones with larger screens and phones that cost less than $300, though Apple's Phil Schiller noted that the presentation "didn't represent Apple policy."

Further Reading

A less expensive 8GB iPhone 5C has also begun showing up in European stores.

For now, iPhone growth isn't quite done: Apple sold 43.72 million iPhones this quarter, up from the 37.43 million phones it sold in Q2 of 2013. That growth is offset by a sizable 16 percent decrease in iPad sales—Apple sold just 16.35 million tablets this quarter, down from 19.48 million a year ago. This decrease comes despite a brand new design for the iPad Air, an oft-requested Retina display upgrade for the iPad mini, and the fact that the iPad lineup now starts at $299 (its lowest price ever for a 16GB first-generation iPad mini). It's possible that the three-year-old iPad 2, which was still being sold for $399 up until mid-March, contributed to this dip. It's hard to imagine that tablet being solely responsible for a three million unit drop.

Update: CEO Tim Cook blamed the size of the decrease on the size of Apple's channel inventory—there was apparently a surplus of iPad minis in the channel last year, whereas this year supply is closer to demand. Soon-to-be-CFO Luca Maestri said that the decline in sell-through to customers was closer to three percent, rather than the 16 percent listed in the results. It's still a drop, but it's a smaller drop, and Cook said the numbers lined up with internal projections.

Moving on from Apple's biggest cash cows, the Mac and iPod lines continue the same sales trends we've been seeing for the last couple years: Macs were up a little, selling 4.14 million units compared to 3.95 million a year ago. These numbers are especially impressive when considered in the context of the wider PC market, which according to Gartner data shrank 1.7 percent year-over-year. This was the first full quarter of availability for the 2013 Mac Pro, and Apple's supply of the machines still hasn't caught up with demand for them, though they continue to represent just a small slice of the overall Mac pie. iPods were way down at 2.76 million units, compared to 5.63 million a year ago. At this point, the entire iPod lineup is responsible for just 1.01 percent of Apple's revenue.

Apple's next major presentation will be in early June at its Worldwide Developers Conference (WWDC) in San Francisco. Apple usually doesn't make major product introductions as part of its WWDC keynote, but we are likely to see the next versions of iOS and OS X, and Apple has refreshed some of its Macs during the keynote in the past. In both 2012 and 2013, new iPhones in September were followed by new iPads and Macs in October.

How else do you explain Windows Tablet for Desktops 8.11 (aka Windows 8 and 8 RT)? They panicked and tried to pivot their desktop OS as a tablet OS. Lipstick on a pig and all that.

This is a terribly common misconception. Microsoft is banking on something entirely different: That in a couple of years, there won't be much of a difference between a tablet and a laptop. The two device lines are already converging, and with high powered PC-level processors that sip power hitting the market, it's only a matter of time before they converge more. Convertible laptops are a quick growth sector right now, with Lenova doing incredibly strong business with their lines.

Microsoft is banking that in two years, you won't buy an ultrabook or a tablet, you'll just buy a "device" that does what you need it to do when you need it.

Whether that holds true or not, we'll see....but this simplistic view that Windows 8 was designed specifically to target the tablet market is old and tired. Companies with 55bn in liquid cash assets don't think in terms of just this year, or tomorrow, they plan things out for a decade.

They've been banking on this since PocketPC. Note the name and the Start button on the precursor to Windows Phone. Pre-launch Windows 8 demos done by mini-jobs Sinofsky were all with tablets.

Just because the corporation is worth 55 billion, does not mean that the guy who is ultimately picking the strategy doesn't cock it up.

As to your point about current convertibles, I think they're doing well and are good products. But the hash that was made of Windows 8 was largely due to MS shitting themselves when looking at iPad growth.

Hmm, do people upgrade their tablets as compulsively as their phones? If most people who'd want one already have one, and it's closer to a computer upgrade cycle (~4-5 years) than a phone one (~2 years), the decreased iPad rate would make sense. A year ago they were still a "new" product - now a much higher percentage of buyers would be replacing a previous model.

If anybody has figures on that I'd be interested.

I'm still using the tablet I purchased in mid 2010. I might upgrade this year.

I think some would be surprised at how many iPad users are using them for productivity. And productivity does not mean lots of typing! I know that some people insist it does, but it does not. The numbers quoted in the call would surprise some. FEDEX replacing notebooks with iPads to the tune of thousands a year, for example.

And that doesn't even factor in what happened last month. Microsoft Office available for iPad, and apps like Adobe Lightroom. Two heavyweights in desktop productivity, now on iPad. It will be interesting to see if apps like that make a lot of people go "oh, the iPad seems legitimate enough for productivity now, I'm in."

Sure, you need a keyboard for real iPad productivity, but the one I got only cost around $80. Noticeably less than the comparable (real keys, not touch) keyboards available for the Surface.

Apple would probably sell more iPads if they weren't built to last. My technologically ancient iPad 2 still seems quite viable on iOS 7.

Hmm, do people upgrade their tablets as compulsively as their phones? If most people who'd want one already have one, and it's closer to a computer upgrade cycle (~4-5 years) than a phone one (~2 years), the decreased iPad rate would make sense. A year ago they were still a "new" product - now a much higher percentage of buyers would be replacing a previous model.

If anybody has figures on that I'd be interested.

No figures, only anecdotes.

They gave out iPads at work as year-end presents at the end of 2010. By the end of 2013, about half had upgraded (all but one or two regularly use either the original or a newer iPad). In that same time period, everyone has gotten a new phone.

One other point I'll make about upgrades is that I've found that people tend to keep their desktop/laptop computers longer, now that a good portion of their screen time is on tablets. There's still things people do where they want the full computer experience, but they feel less need to upgrade to newest/best when they do so much of their stuff on a different device.

Hmm, do people upgrade their tablets as compulsively as their phones? If most people who'd want one already have one, and it's closer to a computer upgrade cycle (~4-5 years) than a phone one (~2 years), the decreased iPad rate would make sense. A year ago they were still a "new" product - now a much higher percentage of buyers would be replacing a previous model.

If anybody has figures on that I'd be interested.

The big "uh oh!" in that is the sales are flattening which means that (if your hypothesis is correct) the market is saturated. Corollary is that there's nowhere to go but down. Nearly as bad or maybe worse is if the market *isn't* saturated. That means you're losing market share to Android and Windows. Lower market share makes it tougher to woo developers and "oops!" there goes your 'ecosystem'. So yeah, the iPad news isn't particularly great.

To be fair to Ballmer, almost all the stories behind the Windows 8 development indicate that it was Sinofsky and his people who stuck their fingers into their ears and went "lah, lah, lah" despite the reservations of many longtime Microsoft partners and clients.

As many people already said, they didn't need to go all in - even Apple hasn't done that with OS X and iOS - the two are still separate. But then again, people tend to take away the wrong message from the story of Steve Jobs and Apple and thus I am not surprised that Sinofsky allowed himself to fall into the trap. What surprised me was that Ballmer allowed the former to hang himself with whatever rope he could find.

As for the iPad, I think most people who wanted and could afford an iPad already has one or even more of them - and at the margins that Apple charges, I don't think they are worried much about growth. I am still using my old 3rd gen iPad and it pretty much still works great.

How else do you explain Windows Tablet for Desktops 8.11 (aka Windows 8 and 8 RT)? They panicked and tried to pivot their desktop OS as a tablet OS. Lipstick on a pig and all that.

No, silly.

Microsoft has a vision for convergence that involves a unified UI and code base across all form factors. Win 8 is the first commercially available iteration of that concept on phone, tablet, desktop, server, and anything else you can think of. It's flawed because it's a so fundamentally new, which is why Microsoft has been and will continue to release quick, plentiful and free updates as they iterate and refine the concept.

WinRT was a hedge. When Win 8 started development it was absolutely unclear whether Intel could get it's s*it together and build a decent mobile platform with reasonable power consumption. So, WinRT was the hedge bet that Microsoft made in case it had to make a big push onto Android platforms. Intel pulled off a few miracles and we have Bay Trail. No need for Win RT any more and I'm sure it'll be allowed to die a lingering death.

Apple was pretty clear in the call that iPad sell through was actually only down 3%, not 16%. Sell through last year was in the 18 million area, and sell through this past quarter in the 17 million area. Analysts didn't seem to quite understand the numbers, and Apple's explanation wasn't clear enough. The call straightened out the numbers.

I'm always suspicious of these kinds of statements where they try to sugar coat latest figures by making adjustments in the past figures. If we accept this -3% to be a true figure, it would mean that a year ago the real figure would have been about -13%. Or in other words iPad has been on the ropes over a year.

Apple was pretty clear in the call that iPad sell through was actually only down 3%, not 16%. Sell through last year was in the 18 million area, and sell through this past quarter in the 17 million area. Analysts didn't seem to quite understand the numbers, and Apple's explanation wasn't clear enough. The call straightened out the numbers.

I'm always suspicious of these kinds of statements where they try to sugar coat latest figures by making adjustments in the past figures. If we accept this -3% to be a true figure, it would mean that a year ago the real figure would have been about -13%. Or in other words iPad has been on the ropes over a year.

Last year's numbers were that iPads were 19.5 million, up from 11.8 million. The 13% that represents change in channel inventory equals 2.5 million. So adjusting last year's number would mean that 11.8 million still grew to 17.0 million, not that last year declined by 13%.

To be fair to Ballmer, almost all the stories behind the Windows 8 development indicate that it was Sinofsky and his people who stuck their fingers into their ears and went "lah, lah, lah" despite the reservations of many longtime Microsoft partners and clients.

As many people already said, they didn't need to go all in - even Apple hasn't done that with OS X and iOS - the two are still separate. But then again, people tend to take away the wrong message from the story of Steve Jobs and Apple and thus I am not surprised that Sinofsky allowed himself to fall into the trap. What surprised me was that Ballmer allowed the former to hang himself with whatever rope he could find.

As for the iPad, I think most people who wanted and could afford an iPad already has one or even more of them - and at the margins that Apple charges, I don't think they are worried much about growth. I am still using my old 3rd gen iPad and it pretty much still works great.

I finally upgraded my Day 1 iPad 1 to an Air the other day. It ticked all the boxes i'd been waiting for, thinner, faster, longer, sharper, better in every way (except for the plastic screen)

My 4yo has been using the original iPad for the last few years anyway, and we left it at grandma's the other day. Was only then that we realized just how much we miss having the old iPad around!

Anyway, when the kiddy apps we want, stop working on the iPad1, then we'll have to think about a solution. I have no desire to hand down my Air yet, nor buy a new iPad for the kids. Ideally I'd like the ipad1 to last another generation or two!

Hmm, do people upgrade their tablets as compulsively as their phones? If most people who'd want one already have one, and it's closer to a computer upgrade cycle (~4-5 years) than a phone one (~2 years), the decreased iPad rate would make sense. A year ago they were still a "new" product - now a much higher percentage of buyers would be replacing a previous model.

If anybody has figures on that I'd be interested.

I was just think the same thing.

My wife has an iPad-Mini (non-retina) and I doubt we'll every replace it or buy another until it breaks. My iPhone on the other hand will get an upgrade so my wife can ditch her dumb phone.

How else do you explain Windows Tablet for Desktops 8.11 (aka Windows 8 and 8 RT)? They panicked and tried to pivot their desktop OS as a tablet OS. Lipstick on a pig and all that.

This is a terribly common misconception. Microsoft is banking on something entirely different: That in a couple of years, there won't be much of a difference between a tablet and a laptop. The two device lines are already converging, and with high powered PC-level processors that sip power hitting the market, it's only a matter of time before they converge more. Convertible laptops are a quick growth sector right now, with Lenova doing incredibly strong business with their lines.

Microsoft is banking that in two years, you won't buy an ultrabook or a tablet, you'll just buy a "device" that does what you need it to do when you need it.

Whether that holds true or not, we'll see....but this simplistic view that Windows 8 was designed specifically to target the tablet market is old and tired. Companies with 55bn in liquid cash assets don't think in terms of just this year, or tomorrow, they plan things out for a decade.

Except what MS did was stupid. The difference between a desktop PC and a phone is not the CPU or ram, it is the ui elements. Those aren't going to change because the human body isn't going to change. Which means a decent phone app needs to be written with an appropriate UI, likewise a decent desktop app uses the kbd and pointing device efficiently.

MS totally screwed this up, forcing the less efficient UI on everyone, even when it made no sense. Now they are (sorta) backtracking, claiming that win8 is super awesome because it allows you to write one app for multiple screens. But this is still either stupid, or a deliberate lie. The hard part in writing the app is the UI, and that STILL has to be optimized for each screen. Otherwise you get the java situation where your write-once app sucks equally no matter where it runs. Basically Apple provide the EXACT same thing - a common OS, frameworks, APIs across the product line, except with more thought put into optimizing the UI portion for each target device.

Going on about how you will be able to plug your phone into a docking station and therefore... COMPLETELY misses the point about what matters.

Hmm, do people upgrade their tablets as compulsively as their phones? If most people who'd want one already have one, and it's closer to a computer upgrade cycle (~4-5 years) than a phone one (~2 years), the decreased iPad rate would make sense. A year ago they were still a "new" product - now a much higher percentage of buyers would be replacing a previous model.

If anybody has figures on that I'd be interested.

The big "uh oh!" in that is the sales are flattening which means that (if your hypothesis is correct) the market is saturated. Corollary is that there's nowhere to go but down. Nearly as bad or maybe worse is if the market *isn't* saturated. That means you're losing market share to Android and Windows. Lower market share makes it tougher to woo developers and "oops!" there goes your 'ecosystem'. So yeah, the iPad news isn't particularly great.

John Swanson

Apple can expand, in the traditional way, into wearables and health. Perhaps not as big as phones, but solid, and traditional Apple strengths of UI and interop are worth higher prices than others can charge. (Cf samsung gear and gear fit)

But there are other directions Apple can go that people seem to be completely ignoring. Turns out, who knew, that Apple have serious competence in CPU design! So how about:This year and next year Apple replace their existing cloud infrastructure with ARM CPUs of their own design? Learn how to do this well, and enjoy the win of lower power and cheaper infrastructure compared to everyone else. Pretest new CPU features in a design thtat's a little more tolerant of high power, and move them to mobile a year or two later. And once this is running smoothly, start selling those chips to Facebook, MS etc. Not necessarily the servers; Apple doesn't really have the skills to sell servers. But why shouldn't they sell chips to markets where those chips would not directly hurt Apple? Just because Apple doesn't sell chips today? Like MS didn't sell phones two years ago?

Hmm, do people upgrade their tablets as compulsively as their phones? If most people who'd want one already have one, and it's closer to a computer upgrade cycle (~4-5 years) than a phone one (~2 years), the decreased iPad rate would make sense. A year ago they were still a "new" product - now a much higher percentage of buyers would be replacing a previous model.

If anybody has figures on that I'd be interested.

The iPhone sales have also gone up which also begs the question whether there is a fair number of people opting for an iPhone over a tablet and that assuming Apple enter into the phablet market it might end up eating up more of the iPad sales. Not that there is anything good or bad about it but I think investors, rather than their usual myopic view on the world, need to have a look at the figures over all and spend some time understanding how the end user thinks rather than sitting blindly by passing judgement.

Right. Seven for one stock split?!? I wasn't going to call you an idiot. But, what the hell.

Personally, I'm banging my head against the wall -but not for a reason that you apparently can comprehend.

Damn, damn, damn…

You realize that splitting a stock doesn't add any intrinsic value, right? It's just giving you 7x as many shares that are each worth 1/7 as much, so it's a wash.

There are some pragmatic reasons of a split (e.g., a lower share price can be more attractive to small investors). And some evidence that companies that split their shares have better short-term performance (e.g., http://online.wsj.com/news/articles/SB1 ... 3507535744).

An amazing result considering the increased competition from other multi-billion dollar companies. Very impressed!

With improved access to China and a larger screen phone, sales should continue to achieve world-wide growth.

The only negative is that even after so many years, the inability of the competition to really tackle Apple in the products that are it's profit centres. That's quite depressing. I love competition!

I agree that the tablet and laptop markets are going to blur. A business partner has a MacBook Air and it's really quiet swish. I have had several tablets and plan for the next to be an ultrabook. Tablets largely sit unused by me and even my daughter prefers the laptop except for games.

Can't wait for then next iPhone to come out. Very exciting. In Asia the iPhone screen size is just too small for the middle class as they want a media consumption device. What I see for Apple users in the preference to have two devices as a result - an iPhone and an iPad/iPad Mini.

Hmm, do people upgrade their tablets as compulsively as their phones? If most people who'd want one already have one, and it's closer to a computer upgrade cycle (~4-5 years) than a phone one (~2 years), the decreased iPad rate would make sense. A year ago they were still a "new" product - now a much higher percentage of buyers would be replacing a previous model.

If anybody has figures on that I'd be interested.

I'm still using the tablet I purchased in mid 2010. I might upgrade this year.

Interesting fact: About half of the iPhone sales last quarter were to people not owning an iPhone before. Two thirds of the iPad sales last quarter were to people not owning an iPad before. So it indeed looks like people not buying new iPads too often...

How else do you explain Windows Tablet for Desktops 8.11 (aka Windows 8 and 8 RT)? They panicked and tried to pivot their desktop OS as a tablet OS. Lipstick on a pig and all that.

This is a terribly common misconception. Microsoft is banking on something entirely different: That in a couple of years, there won't be much of a difference between a tablet and a laptop. The two device lines are already converging, and with high powered PC-level processors that sip power hitting the market, it's only a matter of time before they converge more. Convertible laptops are a quick growth sector right now, with Lenova doing incredibly strong business with their lines.

Microsoft is banking that in two years, you won't buy an ultrabook or a tablet, you'll just buy a "device" that does what you need it to do when you need it.

Whether that holds true or not, we'll see....but this simplistic view that Windows 8 was designed specifically to target the tablet market is old and tired. Companies with 55bn in liquid cash assets don't think in terms of just this year, or tomorrow, they plan things out for a decade.

Except what MS did was stupid. The difference between a desktop PC and a phone is not the CPU or ram, it is the ui elements. Those aren't going to change because the human body isn't going to change. Which means a decent phone app needs to be written with an appropriate UI, likewise a decent desktop app uses the kbd and pointing device efficiently.

You probably don't know that the Windows UI was born and designed in a time when 640x480 pixels on a 14" screen were the norm and 800x600 were a luxury. Today's screens with loads of microscopic toolbars and icons and buttons the size of a fly that you have to aim at with a pointed device may be loved by geeks all over, but most people hate that as they would hate the dash of their cars looking like the cockpit of an airliner.

Windows 8 is less of something new and more of returning to what the UI once were before screens with more and more pixels hit systems with no resolution-independence.

Hmm, do people upgrade their tablets as compulsively as their phones? If most people who'd want one already have one, and it's closer to a computer upgrade cycle (~4-5 years) than a phone one (~2 years), the decreased iPad rate would make sense. A year ago they were still a "new" product - now a much higher percentage of buyers would be replacing a previous model.

If anybody has figures on that I'd be interested.

I'm still using the tablet I purchased in mid 2010. I might upgrade this year.

Interesting fact: About half of the iPhone sales last quarter were to people not owning an iPhone before. Two thirds of the iPad sales last quarter were to people not owning an iPad before. So it indeed looks like people not buying new iPads too often...

Not surprising given that these are basically content limited-use content consumption devices (and 2nd or 3rd devices, at that). You surf the web directly or via applications and you watch video. What has changed there in the past 4-5 years? Not much.

Its not all that different from TV's which people keep for a fairly long time, much longer than PC.

We got an Ipad 2 in 2011 and while the tablets release since then are cute, there is nothing really so new or great over and above the functionality of that device which we actually access, to justify dumping this one and pouring out 500 bucks or more for another one. Now the makers of these thing and their media advertiorial arms will trawl out a million stories about specifications, but really not much has changed for most people and that is the key.

Tablets were a useful improvement on Netbooks, which for many people served a similar purpose, but once you actually own a tablet then the reasons to keep upgrading are fairly low, especially for a device that for most people spends most of its time lying next to your sofa.

I think some would be surprised at how many iPad users are using them for productivity. And productivity does not mean lots of typing! I know that some people insist it does, but it does not. The numbers quoted in the call would surprise some. FEDEX replacing notebooks with iPads to the tune of thousands a year, for example.

And that doesn't even factor in what happened last month. Microsoft Office available for iPad, and apps like Adobe Lightroom. Two heavyweights in desktop productivity, now on iPad. It will be interesting to see if apps like that make a lot of people go "oh, the iPad seems legitimate enough for productivity now, I'm in."

Sure, you need a keyboard for real iPad productivity, but the one I got only cost around $80. Noticeably less than the comparable (real keys, not touch) keyboards available for the Surface.

Apple would probably sell more iPads if they weren't built to last. My technologically ancient iPad 2 still seems quite viable on iOS 7.

The keyboard isn't the problem, it's easily solved. The screen size is the issue.

I'm not going I swap dual 27" displays for a tablet. If I change anything it will be adding a third 27" display, two isn't enough to be fully productive.

If your idea of real work is typing out emails then fine, a tablet might work. But so would a blackberry or windows 6.5 phone.

I love my tablet, but it simply is not suitable for a person who is trying to get serious productivity work done. Your example of Lightroom is a joke. No way is any serious photographer going to do real work on a small screen.

In many cases, tablets are. iPad sales might be down on the prior year's equivalent quarter, but PC sales are trending down much more quickly.[/quotit

Actually no. IPad sales were down 16%. PC sales were down 1.7%. And I think market saturation explains about 5% of the loss in iPad sales. The vast majority of the drop Is explained by consumers choosing other tablets instead whether it's because consumers are attracted by the features of the other tablets (eg, stylus input, multi-screen functionality, keyboard attachment, access to apps or programs not on iOS, etc.) or consumers realize an iPad is not a good value or they think iOS is getting stale and don't want to be tied to iTunes. The bottom line is I bet the tablet market as a whole grew - it's just that apple didn't capture any of that growth and actually even shrunk while others are growing. The iPad was the pioneer in doing a tablet differently but now others have capitalized on that pioneering and are doing it better and cheaper. It's crazy that the non retina iPad mini, which is made out of the parts put in the 2011 iPad 2 (things like the pathetically low .5GB of RAM) costs $300 when the nexus 7 2013 costs only $230. That's highway robbery. My dell venue pro 8 with full windows, a subscription to office and active stylus support only cost me $200 (special promotion... Usually more like $250). It's not really surprising that Apple rakes in the cash given how much they overcharge you. If I were in the market for a new tablet I'd be looking to the new nexus 8 that should come out soon. You can guarantee that it will be reasonably priced and not skimp in the important areas.

Nobody ever connected their Nokia phones to the internet. Do you even remember how useless it was? I do.

Maybe a few people did it, but not 70 million people.

Right. My 2007 Nokia N95 was a much smarter device that the iPhone which debuted the same year. Back then, I did not even consider the iPhone to be a smartphone but a feature phone. It didn't have 3G. The camera was a joke. It wasn't location aware. You couldn't even install apps to it. The GUI of iPhone was admittedly much better, but overall, if one of these devices was useless, it was the iPhone.

Hmm, do people upgrade their tablets as compulsively as their phones? If most people who'd want one already have one, and it's closer to a computer upgrade cycle (~4-5 years) than a phone one (~2 years), the decreased iPad rate would make sense. A year ago they were still a "new" product - now a much higher percentage of buyers would be replacing a previous model.

Right. My 2007 Nokia N95 was a much smarter device that the iPhone which debuted the same year. Back then, I did not even consider the iPhone to be a smartphone but a feature phone. It didn't have 3G. The camera was a joke. It wasn't location aware. You couldn't even install apps to it. The GUI of iPhone was admittedly much better, but overall, if one of these devices was useless, it was the iPhone.

Actually, the original iPhone was location aware via Skyhook's WiFi data, which worked remarkably well in populated areas, and even in the country the cell tower triangulation was still helpful if you were utterly lost.

But, more to the point, the above quote is a prime illustration of why Nokia would have gone out of business except for Microsoft's buyout. Apparently they too somehow believed the N95 was superior due to the above listed "features". And this isn't some looking back through rose glasses -- my 2007 iPhone is still fully functional as our home theater universal remote, cooking timer and alarm clock. The remote control stuff comes via those pesky third party apps that didn't exist, but everyone new were coming (except Nokia, apparently).

And about some of the stuff the N95 did have, like 3G? Back in 2007 3G was a joke. When the iPhone 3G came out in 2008, I could have upgraded to it at the fully subsidized price after just one year and was going to -- except that I did a bake off loading nytimes.com: my original iPhone on Edge vs. the first iPhone 3G in the office...and I won. That's how poor 3G was back then even where full bar coverage did exist. I ended up staying with the original iPhone unit the 3GS came out.

That's how poor 3G was back then even where full bar coverage did exist.

Maybe in developing countries. It was very good in Finland already back then. As I recall, I paid 10€ a month for unlimited 2 MB down, and far speedier options were available. We had HSDPA already in 2005..

That's mobile market, not "Enterprise" sales. As the article you linked even notes, Microsoft still owns 90%+ of the PC install base for Enterprise (and a considerable amount of back-end install base, to boot), which is unlikely to change any time soon.

That's how poor 3G was back then even where full bar coverage did exist.

Maybe in developing countries. It was very good in Finland already back then. As I recall, I paid 10€ a month for unlimited 2 MB down, and far speedier options were available. We had HSDPA already in 2005..

Is the US a developing country now? Euro countries are much smaller, easier to quickly outfit a new technology to provide better coverage. The US is massive and there are still plenty of areas even driving around major metro areas where you end up on 1X instead of 3G. Also, I'd be more willing to pay full upfront phone prices for Euro billing rates.

How else do you explain Windows Tablet for Desktops 8.11 (aka Windows 8 and 8 RT)? They panicked and tried to pivot their desktop OS as a tablet OS. Lipstick on a pig and all that.

This is a terribly common misconception. Microsoft is banking on something entirely different: That in a couple of years, there won't be much of a difference between a tablet and a laptop. The two device lines are already converging, and with high powered PC-level processors that sip power hitting the market, it's only a matter of time before they converge more. Convertible laptops are a quick growth sector right now, with Lenova doing incredibly strong business with their lines.

Microsoft is banking that in two years, you won't buy an ultrabook or a tablet, you'll just buy a "device" that does what you need it to do when you need it.

Whether that holds true or not, we'll see....but this simplistic view that Windows 8 was designed specifically to target the tablet market is old and tired. Companies with 55bn in liquid cash assets don't think in terms of just this year, or tomorrow, they plan things out for a decade.

Except what MS did was stupid. The difference between a desktop PC and a phone is not the CPU or ram, it is the ui elements. Those aren't going to change because the human body isn't going to change. Which means a decent phone app needs to be written with an appropriate UI, likewise a decent desktop app uses the kbd and pointing device efficiently.

You probably don't know that the Windows UI was born and designed in a time when 640x480 pixels on a 14" screen were the norm and 800x600 were a luxury. Today's screens with loads of microscopic toolbars and icons and buttons the size of a fly that you have to aim at with a pointed device may be loved by geeks all over, but most people hate that as they would hate the dash of their cars looking like the cockpit of an airliner.

Windows 8 is less of something new and more of returning to what the UI once were before screens with more and more pixels hit systems with no resolution-independence.

These numbers are especially impressive when considered in the context of the wider PC market, which according to Gartner data shrank 1.7 percent year-over-year.

How is this surprising again ? Seeing as how The Mac products have been bucking the downward industry trend for quite a while now ? The Win PC market has been dropping in favor of other devices for several years now and Apple has seen grown in the same. This is not new information Andrew. Your focus is too narrow here - like you woke up this morning and haven't been paying attention to Apple products market positions.

Quote:

iPods were way down at 2.76 million units, compared to 5.63 million a year ago. At this point, the entire iPod lineup is responsible for just 1.01 percent of Apple's revenue.

Yep we only made $456 Million dollars off of these things last quarter.... that only comes out to $1.8 Billion dollars per year - they ain't making us enough money - let's scrap the products !! [end sarcasm]

Quote:

Apple usually doesn't make major product introductions as part of its WWDC keynote,

Wow. Really Andrew ? Is your head that deep in the sand ? The Macbook Pro w/ Retina Display was introduced in June 2012 - Hmm.... that date looks kind of familiar. The first 4 iPhone models were also introduced in -- there's that month again -- June of their respective years. That's just 5 products off the top of my head -- are you sure you don't want to rethink that claim ?

The first 4 iPhone models were also introduced in -- there's that month again -- June of their respective years. That's just 5 products off the top of my head -- are you sure you don't want to rethink that claim ?

January 2007 was the iPhone announcement actually, altho it wasn't released until June. WWDC being more Pro focused, things like the MBP being released or the new Mac Pro design being introduced makes perfect sense.

That's how poor 3G was back then even where full bar coverage did exist.

Maybe in developing countries. It was very good in Finland already back then. As I recall, I paid 10€ a month for unlimited 2 MB down, and far speedier options were available. We had HSDPA already in 2005..

Is the US a developing country now? Euro countries are much smaller, easier to quickly outfit a new technology to provide better coverage. The US is massive and there are still plenty of areas even driving around major metro areas where you end up on 1X instead of 3G. Also, I'd be more willing to pay full upfront phone prices for Euro billing rates.

Population density is lower in Nordic countries than in the USA, yet they get wireless technologies a lot earlier. There's hardly any excuse for the US telecoms to not develop at least around metropolitan areas.

That's how poor 3G was back then even where full bar coverage did exist.

Maybe in developing countries. It was very good in Finland already back then. As I recall, I paid 10€ a month for unlimited 2 MB down, and far speedier options were available. We had HSDPA already in 2005..

Is the US a developing country now? Euro countries are much smaller, easier to quickly outfit a new technology to provide better coverage. The US is massive and there are still plenty of areas even driving around major metro areas where you end up on 1X instead of 3G. Also, I'd be more willing to pay full upfront phone prices for Euro billing rates.

Population density is lower in Nordic countries than in the USA, yet they get wireless technologies a lot earlier. There's hardly any excuse for the US telecoms to not develop at least around metropolitan areas.

Average population density is a misleading statistic in this case. A much greater percentage of people in the Nordics live in high-density areas than in the U.S. It's just averaged with a lot of very sparsely populated areas. U.S. suburban sprawl means a much higher percentage of people live in mid-range density areas. It's much more expensive to deliver services (whether wireline or wireless) to people living in mid-range density areas than high-density areas.

That's the same old song and excuses recycled by the US companies. Truth is you can go almost anywhere in Scandinavia, urban or complete wilderness, and get better coverage and signal that in you can in most of the US. I used to think dropped calls, dead spots and completely dead areas were "normal" until I left the US and realised that they were not. Also educative was the fact that almost none of the phone reviews even discussed handset reception quality as they used to in the US - all that drama about handset reception was actually just .the handset makers hung out to dry by greedy telcos who took subscribers' money but put it into their bonuses instead of coverage.

In any case, all that is water under the bridge, we are here now and cannot expect tablet sales to go on rising forever - at least not without step change in their input and creation capabilities.

Andrew Cunningham / Andrew has a B.A. in Classics from Kenyon College and has over five years of experience in IT. His work has appeared on Charge Shot!!! and AnandTech, and he records a weekly book podcast called Overdue.